Why is Hacking on the Rise?

Topics:

It’s no secret that privacy is a huge issue. It seems that nowadays we can’t go a week without seeing another data breach in the news. The most recent breach was Facebook, who recently got hacked and more than 50 million users were impacted. In 2017, we hit a new record high of 1,579 breaches, an upturn of 44.7 percent, which means we’re seeing multiple breaches per week, if not per day.

What’s the big deal anyway?

$7,761 is the average direct loss a consumer experiences from credit card theft. That’s a HUGE deal! A report by an electronic payment systems company, ACI Worldwide, estimates that 46 percent of all Americans had their card information compromised in the past five years, with someone becoming a new identity theft victim every two seconds.

According to the Identity Theft Resource Center’s annual report, nearly 20 percent of all data breaches in 2017 included credit and debit card information, and the number of records included in these breaches grew by 88 percent since 2016, putting even more people at risk of credit card fraud.

Why is hacking on the rise to begin with? Here are three reasons that point to the increase of hacking, and they aren’t what you think.

1. People are paying by cards, even for small purchases

When plastic and other forms of digital transactions were introduced 65 years ago, many saw that as the death knell for cash. To their credit, people all over the world, and especially today’s millennials, have overwhelmingly embraced plastic.

Age is a major predictor of whether someone will pay for small purchases with card or cash. In a study, 46 percent of surveyed millennials said they were most likely to use debit cards, while 18 percent favored credit cards; 74 percent of those above the age of 50 preferred to use cash, compared to 41 percent of those under the age of 50 who said they use cash but only for small transactions.

In general, young consumers are five times more likely to use a card to pay for small purchases than seniors 65 and older. A survey by ConsumerCredit.com showed a 100 percent of 18-24 year olds report using their debt card for everyday purchases; add in their early adoption of mobile wallets, and you have a generation that is far more exposed to identity theft than those that still use cash.

2. Hackers are getting smarter, and consumers give them everything they need to access to their lives

More and more personal information is given to internet-connected devices to make day-to-day life easier. The critical mass of personal information stored on them attracts highly sophisticated criminal hackers in growing numbers.

For instance, hackers are predicted to target the increasing adoption of smart home automation devices (such as Amazon Echo and Google Home) to spy on consumers, gauge economic status, hijack home automation system and extort thousands of dollars to “give them their life back.”

Smart home devices are always listening, and they have to be ready for any voice command. A security software company, Checkmarx, already successfully hacked Amazon Alexa and Echo to record, and even transcribe, what a user says even after they are done communicating with the device. Outside of this controlled test, there are no reports of hacking on these devices, but that could change any day.

3. Mobile and online payments are on the rise

The number of mobile payment users is projected to grow to 150 million by 2020, offering hackers yet another channel of exploitation and attack on the premise that users will pay to get back contacts, photos, mobile wallet information and other data on their phones.

The use of plastic for every transactions, the growth of mobile forms of payment, and the rising intrusion of the internet into homes and businesses significantly increases the risk, severity, impact and cost of data breaches.

The seemingly innocuous transaction such as paying for a daily chai-tea puts a consumer at greater risk of identity theft, ransomware and other forms of malicious disruption and extortion. So, before it’s too late, consumers need to understand the freeze effect that data breaches can have on their lives and do all they can to keep themselves safe.

How can consumers protect themselves from identity theft?

In response to the more than 9.7 billion records exposed since 2013, a slew of companies have sprung up to offer consumer identity theft protection services for a fee, but as the Federal Trade Commission warns, “No service can protect you from having your personal information stolen.” Therefore, signing up for Identity Theft Protection does not reduce the risk that a consumer’s data might be stolen, but will let the consumer know when it happens.

At this point, is there any way to protect from identity theft? In short, the answer is “yes.” Privacy and security are important, especially when it comes to financial information. Data breaches are happening every day, and there’s no way to completely eliminate the threat of identity theft, but there’s something consumers can do to help reduce visibility to hackers, and ultimately lower the risk of having their identity and personal information stolen: use more cash.

Cash – The perfect antidote to identity theft

When consumers pay cash for groceries, gas station purchases, restaurant bills and other in-person spending, it cuts down exposure to malicious attacks by 50 percent. While they would lose out on a few credit card reward points, they potentially save thousands of dollars in financial losses by choosing not to expose data by using credit and debit cards for small and in-person transactions.

Reward points aren’t free; save more with cash

Moreover, cash has several added advantages such as keeping spending in check, and dramatically increasing savings. In a paper published by the Massachusetts Institute of Technology titled “Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay,” conclusively showed that students using credit cards were willing to pay twice as much for a pair of basketball tickets than those instructed to only hand over cash for the same tickets. The ease of buying with plastic, what marketers call “friction-free spending,” is only half the story. Social scientists found that even the sight of credit card logos makes consumers want to spend more.

Ironically, the rapid rise in digital payments have fortified the value of cash, at least for those wise enough to see it as the perfect antidote to identity theft.